It happened again: another year with far too few posts. As December was getting on, I glanced at the calendar and noticed year-end was approaching quickly. “Whoa, better put something together for the old Substack,” I thought. Then a stomach virus did a tour of our household, and that was that for 2025. I would like to promise more activity here in 2026, but this year I think I’ll try to under-promise and over-deliver.
I try to look at as many companies as I can, under the theory that simply ingesting a lot of information is likely to lead to occasional insights and epiphanies1. And it works! One interesting setup I keep stumbling upon is the “European company with a listed Indian subsidiary.”
In recent years, the Indian stock market has shown strong performance. The MSCI Index is up 15.4% annualized over the last 5 years. The Indian market features high participation by retail investors, who are willing to pay lofty multiples for companies with open-ended growth profiles. Sound familiar? A strong 2025 notwithstanding, European stock markets have not rewarded investors in the same way, and valuation multiples for mature companies are low.
Let’s say you’re in charge of a mature, profitable European company. Think an industrial, a retailer, a consumer staples business, or anything else that has little or nothing to do with AI or aerospace/defense or any other hot sector. The market is likely pricing your shares at less than 15x earnings. But let’s say you have a subsidiary in India. This subsidiary is a fairly small part of your business, but it is profitable and growing at 20% or higher. You could do nothing and hope the market eventually recognizes the value of this high-growth asset, or you could do an IPO and sell 25-50% of your Indian subsidiary. You’ll have a nice cash windfall, and hopefully, your subsidiary will trade at 30-40x earnings or more, highlighting the value of the shares you continue to own. As time goes on, you can place more subsidiary shares, benefitting your own shareholders. Maybe the market will credit your company for the observable value of the now-public Indian subsidiary, and your shares will zoom.
I think the logic of Option 2 is airtight, and that’s what multiple European companies have elected to do. Whether or not the market is rewarding these companies as hoped is unclear. Let’s take a look at 3 companies that have listed Indian subsidiaries.
F.I.L.A.
While “FILA” may bring to mind the Korean sportswear company, this FILA is an acronym for “Fabbrica Italiana Lapis ed Affini.” The Italian Factory of Pencils and Related Products, Google tells me. And that’s exactly what FILA is. FILA was founded in Florence and has been stewarded by the Candela family since 1956. For most of the 20th century, FILA supplied Italy with pencils, pens, markers, and other school, office, and fine art supplies. Beginning in the 1990s, the company expanded its offerings to other European companies and then overseas.
While FILA’s story is not well-known here in the States, one of FILA’s products is iconic.
There is hardly an American schoolchild who is not familiar with the Dixon Ticonderoga HB2 pencil. FILA purchased the Dixon Ticonderoga Company in 2005.
FILA is a frequent acquirer. Its biggest acquisition to date was the 2018 acquisition of Pacon, which FILA bought for $325 million and placed under Dixon Ticonderoga. Unfortunately, the substantial debt that FILA took on to fund the Pacon purchase caused stress in the COVID era, when school and office closures caused demand for FILA’s products to plunge. But the company muddled through, spending years working through the acquisition debt and restoring its balance sheet.
In 2023, FILA chose to perform an IPO of its Indian subsidiary DOMS Industries Limited. DOMS is a producer of stationery and art supplies, primarily targeting the lower-end Indian school and consumer markets. With India’s growth in populatoin, wealth, and educational achievement came surging demand for DOMS’ products, and DOMS revenues doubled from fiscal 2021 to fiscal 2023. The IPO was a success. FILA performed a follow-on offering in late 2024, and now holds 26.01% of DOMS Industries shares.
Today, FILA has a market capitalization of Eur 496 million and net debt of Eur 203 million for an enterprise value (pre-DOMS) of Eur 699 million. Twelve trailing month EBITDA was Eur 105 million and EBIT, Eur 72 million. At an EV/EBITDA ratio of 6.7x and an EV/EBIT ratio of 9.7x, I would declare this mature, somewhat levered consumer goods manufacturer in the neighborhood of fairly valued.
But of course, there is DOMS Industries! In Euro terms, the DOMS shares that FILA owns are worth Eur 396 million, or 57% of FILA’s enterprise value! Backing out the value of the DOMS stake, the market is valuing FILA’s core operations at only 2.9x EBITDA and 4.2x EBIT. Suddenly, the valuation looks a great deal more interesting.
But even at this discount, I don’t find FILA all that compelling. The company’s track record on mergers and acquisitions can generously be described as “uninspiring,” and the company clearly intends to do more. I think it’s unlikely that the DOMS stake will be monetized in the near future. The company describes its remaining stake as strategic and must maintain various ownership thresholds to preserve certain voting rights. But more important, DOMS Industries is likely to be materially overvalued. Shares trade at an eye watering 75x trailing earnings and 36x forward EBITDA. Perhaps not an issue were FILA willing and able to monetize the entire stake tomorrow at close to market value, but very relevant when FILA intends to hold these shares at least for the intermediate term.
SSP Group Plc
Moving on, we have SSP Group plc. SSP is a British restaurant, bar, and café owner that operates primarily in hospitals, airports, train depots, highway rest stops, shopping centers, and similar. A concessionaire, more or less, selling food and beverage to a captive audience.
This is not a business model that I like very much. Margins are thin, capital intensity is high, and customers are liable to complain about prices and selection. Do too well, and the lessor demands more at renewal. (The fact that I once took an ugly loss in an Italian concessionaire likely introduces some bias on my part.) A look at SSP’s long-term stock chart reveals nothing but pain: shares are down by a third over the last decade. Shares have livened up lately, as SSP revealed a plan to shutter loss-making units in Germany and cut costs throughout the system. Maybe it’s a new day at SSP? There are also rumors of an activist investor attempting to put together a buyout.
Being pretty skeptical of SSP’s operating model and lackluster track record, I haven’t delved too deeply into the enterprise and I have no view, at least for now, on whether or not the turnaround will be successful. But SSP falls squarely into our “valuable Indian subsidiary” bucket thanks to the mid-2025 IPO of “Travel Food Services Limited.” Travel Food is a joint venture between SSP and the Kapur Family via K Hospitality Corp. Travel Food Services, which started in the Mumbai Airport, has grown rapidly and now operates in 14 Indian airports, plus 3 in Malaysia. SSP acquired a 49% stake in 2016, paying GBP 58 million.
SSP did not offer shares in the IPO, actually increasing its stake to 50.01% before the offering. Following the IPO, SSP’s stake is worth GBP 640 million. That’s a cool 11x in 9 years. If only the rest of SSP’s business had performed so well.
SSP has a market capitalization of GBP 1,601 million, so Travel Food Services is material to the investment thesis at 40% of market capitalization. The outcome of SSP’s turnaround attempt is likely to be the biggest factor affecting SSP’s share price in coming years, but investors cannot ignore a major asset like Travel Food Services. Like FILA, it seems unlikely that SSP will seek to dispose of its Indian subsidiary, but it could become an interesting catalyst down the road.
Koninklijke Vopak N.V.
Vopak is a fun one. Vopak is a liquid storage company, operating in dozens of major ports and terminals around the world, and offering storage for an incredible variety of products. Think oil and gas and their derivatives, fuels, and chemical feedstocks and finished products. The company was founded in 1616 in the port of Amsterdam. For its 400th anniversary, the company commissioned a history that can be found here.
I can hardly think of a piece of infrastructure more critical to global industrial supply chains than liquid storage, nor an operator more venerable and successful than Vopak. And yet, shares have languished in recent years due to investor worries about long-term demand for traditional fossil fuels. Vopak has responded to the threat by pivoting its portfolio toward natural gas and low-carbon fuels storage, and by shifting customers from short-term agreements to 10-20 year contracts with inflation-linked pricing.
While investors have yet to reassess Vopak’s prospects, Vopak seems to believe its shares are attractively priced, repurchasing 6.3% of shares outstanding in 2024 and another 1.8% through June 30, 2025. Vopak’s capacity to repurchase shares is limited by its small float: more than half of the company is owned by Dutch investment holding company HAL Trust NV. (HAL Trust, the corporate descendent of Holland-America Line, is well worth its own post. Someday.) Vopak shares trade at just 11x forward earnings, and I can’t help but feel as if this extraordinary company is all but forgotten by the market. But not by all! For Alluvial’s part, Vopak is a component of our Tactile Fund, and I am excited about the company’s future.
Vopak has numerous joint ventures around the world, but one of the most significant is Aegis Vopak Terminals. “AVT” is a joint venture with Indian logistics giant Aegis Logistics, and operates 20 tank terminals at 6 Indian ports. In June 2025, AVT performed a successful IPO. Following the IPO, Vopak continues to hold a 42.2% interest in Aegis Vopak Terminals, worth Eur 1,095 million.
Vopak’s interest in Aegis Vopak Terminals is worth 25% of market capitalization and 15% of its enterprise value. If we adjust Vopak’s valuation for its interest in AVT, Vopak is trading at something like 6.7x 2026 proportional EBITDA. I find this ratio far too low for a company of this quality.
The Upshot
In each of these cases, a mature company performed a nifty maneuver that resulted in a valuable subsidiary being highlighted with an observable market value. But were these transactions effective in achieving a better valuation? So far at least, the answer appears to be “no.”
I suppose that’s the risk in IPOing a subsidiary or pursuing other strategic transactions to highlight value. What if you do it and the market just doesn’t care? Credit for trying something, I suppose. As long as the Indian market continues to value growing companies so highly, I expect other companies with Indian subsidaries will consider listings. And who knows, maybe this is the year that companies that do so will get credit for it.
Happy New Year and thanks for reading!
Alluvial Capital Management, LLC holds shares of Koninklijke Vopak N.V. for client accounts it manages. Alluvial Capital Management, LLC may hold any securities mentioned on this blog and may buy or sell these securities at any time. For a full accounting of Alluvial’s and Alluvial personnel’s holdings in any securities mentioned, contact Alluvial Capital Management, LLC at info@alluvialcapital.com
By sheer coincidence, today happens to be Epiphany for many Western Christians. Peace to all who observe.
Good read, thanks for posting!
A lot of pitches for stock like this rub me the wrong way because they are too bulish in their SoTP calcs.
Look-through earnings seems to be more appropriate, which IIRC is what you usually seem to do
Vopak looks interesting
Happy new year Dave! Keep the substack posts coming, always a pleasurable read.